U.S. v. FASCIANA

September 17, 2002

UNITED STATES OF AMERICA,V.JOHN FASCIANA AND JOSEPH AMATO, DEFENDANTS.

The opinion of the court was delivered by: Laura Taylor Swain, United States District Judge

OPINION AND ORDER

In this mail, wire fraud and conspiracy case, the Government has
indicated its intention to proffer at trial evidence concerning Defendant
John Fasciana's alleged mishandling of a $4,136 check (the "$4,136
check") made payable to Thomson McKinnon Securities Inc. ("Thomson
McKinnon"). Defendant Fasciana seeks to preclude the introduction of such
evidence, contending that its admission would constitute a constructive
amendment of Counts Seven and Twelve of the Third Superseding Indictment
(the "Indictment").

Defendant Fasciana has also objected to the Government's stated
intention to offer
at trial evidence concerning (a) an alleged attempted
conversion of a check in the amount of $4,921*fn1 payable to Thomson
McKinnon, (b) an alleged alteration and mishandling of a check issued to
Fasciana's former law firm by an entity referred to as The Guild Group,
and (c) an alleged effort by Fasciana to defraud insurers in connection
with certain acts charged in the Indictment. Fasciana argues that the
proffered evidence should not be admitted under Rule 404(b) of the
Federal Rules of Evidence.

The Court has considered thoroughly all of the parties' written
submissions and arguments in connection with these applications. For the
following reasons, Defendant Fasciana's application to preclude the
introduction of evidence concerning the $4,136 check is denied and his
Rule 404(b) application is granted in part and denied in part.

The general nature and background of the charges in this case are
outlined in an earlier opinion, United States v. Reddy, Fasciana and
Amato, 190 F. Supp.2d 558 (S.D.N.Y. 2002) ("Fasciana I"), familiarity
with which is assumed.

The $4,136 Check

By letter dated August 13, 2002, the Government notified the Court and
Defendant Fasciana that it intended to introduce trial testimony
concerning the $4,136 check in support of its contention that Fasciana
and his co-conspirators sought and obtained payments from EDS on the
basis of fraudulent representations that certain "Pre-Acquisition
Receivables" had been collected.*fn2 Asserting that this letter
constituted the first revelation that the mail and wire fraud charges set
forth in Counts Seven and Twelve of the Indictment were premised on
anything other than a contention that Fasciana and his co-conspirators
had disguised post-acquisition receivables as Pre-Acquisition
Receivables, Fasciana moves to preclude the Government's evidentiary
proffer, contending that to permit introduction of the evidence at trial
would effect a constructive amendment of Counts Seven and Twelve of the
Indictment.

Counts Seven and Twelve charge Fasciana with mail and wire fraud,
respectively, based on the transmission to EDS of demands for payment of
a $93,527.92 sum. Fasciana acknowledges that the demand was based, in
part, on a representation that the proceeds of the $4,136 check
constituted Pre-Acquisition Receivables. The $4,136 check is not,
however, specifically mentioned in the Indictment. The Government
proffers that Fasciana obtained the $4,136 check, deposited it his trust
account, then signed a check for $4,136 made payable to EDS. The
Government further proffers that Fasciana caused a cover letter
transmitting the check to represent that the $4,136 check was
attributable to the collection of Pre-Acquisition Receivables. See
Government's Letter dated Sept. 9, 2002. Fasciana argues that a fraud
conviction based on an alleged misrepresentation of the nature of those
proceeds would be outside the scope of the charged fraud which, according
to Fasciana, is limited in relevant part to false representations that
receipts for
post-acquisition work were attributable to Pre-Acquisition Receivables.

The Fifth Amendment to the Constitution of the United States guarantees
the right to indictment by a grand jury on felony charges. Thus, "after
an indictment has been returned its charges may not be broadened except
by the grand jury itself." Stirone v. United States, 361 U.S. 212, 215-16
(1960). A court "cannot permit a defendant to be tried on charges that
are not made in the indictment against him." Id., 361 U.S. at 217.

A constructive amendment of an indictment `occurs when
the charging terms of the indictment are altered,
either literally or in effect, by prosecutor or court
after the grand jury has last passed upon them.'
United States v. Zingaro, 858 F.2d 94, 98 (2d Cir.
1988) (quoting Gaither v. United States, 413 F.2d 1061,
1071 (D.C.Cir. 1969)). As such, a constructive
amendment is a per se violation of the Fifth
Amendment. United States v. Delano, 55 F.3d 720, 729
(2d Cir. 1995). `To prevail on a constructive
amendment claim, a defendant must demonstrate that
either the proof at trial or the trial court's jury
instructions so altered an essential element of the
charge that, upon review, it is uncertain whether the
defendant was convicted of conduct that was the
subject of the grand jury's indictment.' United States
v. Frank, 156 F.3d 332, 337 (2d Cir. 1998) (per
curiam) (citing Zingaro, 858 F.2d at 98). In
determining whether an "essential element" of the
offense has been modified, moreover, we have
`consistently permitted significant flexibility in
proof, provided that the defendant was given notice of
the core of criminality to be proven at trial.'
Delano, 55 F.3d at 729 (quoting United States v.
Patino, 962 F.2d 263, 266 (2d Cir. 1992) (internal
quotations omitted)). Moreover, in the context of a
conspiracy charge, `[t]he Government need not . . .
set out with precision each and every act committed
. . . in furtherance of the conspiracy,' particularly
where the acts proven at trial were part of the `core
of the overall scheme and in furtherance of that
scheme.' United States v. Cohen, 518 F.2d 727, 733 (2d
Cir. 1975). `It is clear the Government may offer
proof of acts not included within the indictment, as
long as they are within the scope of the conspiracy.'
United States v. Bagaric, 706 F.2d 42, 64 (2d Cir.
1983), abrogated on other grounds by Nat'l Org. for
Women, Inc. v. Scheidler, 510 U.S. 249 (1994).

Fasciana cites paragraphs 30, 34(h)-(l) and 35(r)-(y) of the
Indictment in support of his argument that proof relating to the $4,136
check would go beyond the crimes charged in Counts Seven and Twelve of
the Indictment. Counts Seven and Twelve charge defendants Reddy and
Fasciana with mail and wire fraud, respectively, in connection with the
mailing and faxing of a 1998 demand for the payment of $93,527.92.

A note as to the structure of the Indictment is in order at the
outset. Paragraphs 1 through 35 comprise Count One of the Indictment,
charging the three named Defendants with a conspiracy to commit mail and
wire fraud. Paragraphs 36 and 37, incorporating by reference paragraphs 1
though 29 and 33, introduce Counts Two through Ten, which charge specific
Defendants with committing specific acts of mail fraud "for the purpose
of executing the fraud scheme set forth in Count One." Paragraphs 38 and
39, incorporating by reference paragraphs 1 through 29 and 33, introduce
Counts Eleven through Thirteen, which charge specific
Defendants with
committing specific acts of wire fraud "for the purpose of executing the
fraud scheme set forth in Count One."

The Indictment paragraphs specifically incorporated into Counts Seven
and Twelve do not include any of the allegations detailing the 1998
Pre-Acquisition Receivables elements of the charged conspiracy. They do
include the Indictment's general description of "The Scheme to Defraud
EDS" as one spanning the period from in or about the fall of 1995 through
in or about June 1999 and consisting of a scheme "to defraud EDS by
inducing EDS to make various contingent payments to [certain persons]
. . . when, in fact, such payments were not due and owing." Indictment,
¶ 12. The $93,527.92 demand was for one of the contingent payments
referred to in paragraph 12. Nothing in paragraph 12 or in any of the
other paragraphs specifically incorporated into Counts Seven and Twelve
purports to characterize or provide details of the alleged Pre-Acquisition
Receivables element of the charged scheme, much less to limit the nature
of that scheme to the mischaracterization of post-acquisition
receivables. Paragraph 12 makes clear the core nature of the fraud
charged — defrauding EDS by inducing EDS to make payments that were
not due and owing. Introduction of evidence that a misrepresentation as
to the nature or source of the proceeds of the $4,136 check underlay the
allegedly fraudulent $93,527.92 demand is neither inconsistent with nor
broader than the allegations laid out in Counts Seven and Twelve and,
thus, does not facially appear to be a constructive amendment of the
charges and allegations set forth in those Counts of the Indictment.

As noted above, however, Fasciana focuses on paragraphs 30, 34(h)-(l)
and 35(r)-(y) of the Indictment in arguing constructive amendment. None
of these paragraphs, which comprise Count One's general description of
the "1998 Payments for the Collection of Pre-Acquisition Receivables"
(¶ 30), the portion of Count One's "Means and Methods" allegations
relating to those payments (¶¶ 34(h)-(l)), and the portion of Count
One's "Overt Acts" allegations relating to those payments (¶¶ 35
(r)-(y)) is incorporated by reference in Count Seven or Count Twelve.
Although the analytical basis for Fasciana's invocation of these
particular provisions of the Indictment is far from clear (perhaps
Fasciana considers reliance on these allegations as narrowing the scope
of Counts Seven and Twelve appropriate because those Counts allege that
the criminal activity charged was undertaken "for the purpose of
executing the fraud scheme set forth in Count One above"*fn3, such that
a holistic view of the scope of Count One is a necessary element of
interpretation of the substantive charges), the Court has considered
carefully whether the allegations in the cited paragraphs effectively
narrow the scope of the criminal activity charged such that introduction
of the evidenced relating to the $4,136 check would constructively amend
the Indictment. The Court concludes, for the following reasons, that it
would not.

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